Mahindra & Mahindra Interested in Sweden’s Bankrupt Saab

Allstate puts a small device in the cars of drivers who sign up for the program that monitors how much they drive and how fast they drive, among other factors. Insurance rates can go down 30% as a result. Check "Clearance Auto" for more info

7:48 pm January 2, 2012

sr luis barreto wrote :

please save this beautifull company with this excellent product if I can I will , this superior car

10:19 pm January 2, 2012

Mohit Panwar wrote :

The deal might get through if M&M is serious about it. The world no longer undermines Indian cos especially after TATA takeover of JLR. Also, it reflects Indian cos are hot on expanding through M&A deals. Let's wait and watch how the second international safari of mahindra fares:)

4:58 pm January 3, 2012

Tristram Buckley wrote :

THE MISTAKEN SAAB POLICY—WHAT ITS AVOIDABLE LOSS FOREBODES FOR THE NATION OF SWEDEN
I am not a politician nor am I affiliated with any political party in Sweden. Sweden did not become an industrial marvel, relative to its small population, during these last five years alone. On the contrary, Sweden’s most iconic brands, SAAB, Volvo and IKEA, have been around and thriving for decades. As I understand its history, Sweden’s technological and industrial success arose during the period of the so-called “Swedish model,” which advanced a public-private partnership. I appreciate the present government’s move toward privatization. Here in the U.S. our tax revenue is just 26.9% of our GDP while Sweden has one of the world’s highest at 47.9%. Yet saving SAAB would ultimately and dramatically lower Sweden’s tax revenue share of the GDP. There are times when plans must be altered to take into account changed circumstances. The Great Recession and the resulting unprecedented upheaval in the automobile industry marks such an occasion.
On the global stage, party labels and political dogma is irrelevant. Ultimately, what is important is success, i.e., the Nation’s GDP and its economic health.
While government leaders must be mindful of polls, they must not govern by polls alone. The average person polled on the street is not an economist nor automobile industry expert nor are they adequately briefed on all necessary matters. Voters may have opinions, as do we all, but they entrust the decision making process to their leaders, whom they expect to be informed and to lead wisely.
Years from now the people of Sweden will not remember poll results, but they will recall the day when there were, once upon a time, two iconic Swedish automobile manufacturers. They will recall how the Swedish government watched Volvo pass to the Chinese and worse, they will recall how the Swedish government turned a cold shoulder to SAAB and let it die an avoidable death in bankruptcy or be lost as a prize to another nation.
President Obama acknowledges that his decision to shovel additional taxpayer dollars to General Motors and Chrysler soon after taking office went against public opinion. But with the automakers rebounding and earning substantial profits, the bailout has become an early campaign theme as he touts himself as a president who’s willing to make the tough decisions.

As for the U.S. loans to GM and Chrysler, both manufacturers repaid their loans and ahead of schedule, proving manufacturers can indeed return to net profitability and, once resuscitated, they can and do repay their loans. Chrysler’s repayment of $7.5 billion in loans to the U.S. and Canadian governments came just weeks after the automaker announced its first profit in five years.

Obama is on course to go down in history as the president who helped save America’s automobile industry.
Political dogma must not constrain policy with inflexibility when historically exceptional events arise. Exceptional times call for exceptional measures. The Great Recession was one of those exceptional times, as was recognized globally. France, Germany, Spain, the UK, China and the U.S. each invested billions of dollars help keep their auto industries afloat during this unprecedented economic collapse. Estimates indicate France’s auto aid package totaled 6 billion Euros, Spain’s commitment was approximately 4 billion Euros, the UK invested 2.8 billion Euros and Germany invested 2.5 billion Euros through its scrappage program. Even Toyota, at the time the world’s largest manufacturer of automobiles, requested an emergency loan of more than $3 billion dollars. Of course, the U.S. invested even more and now GM is once again the largest manufacturer of automobiles in the World and Chrysler has returned to profitability. China would not disclose how much money went to support its automobile industry, but the Chinese government did reveal it was spending $587 billion to stimulate its economy.
Leaders are not only stewards of a Nation while they are in office, but more importantly, they steer the Nation’s future. The Titanic’s captain would attest to the need to alter a ship’s course when an unexpected iceberg presents itself in the ship’s path. Staying the course, disregarding reality, solely for the purpose of staying the course, has proven disastrous throughout history. The course of privatization and smaller government is surely a worthy agenda. Nevertheless, where circumstances call for at least a temporary hold on that agenda, at least with respect to just one company and the opportunity to save SAAB rather than lose it completely, that opportunity must be seized.
This is not a question of whether SAAB should be private or public. Rather, the issue is whether SAAB should be allowed to die when other manufacturers were saved by their Nations. Should Sweden be put at a distinct disadvantage going forward as it has now lost its only two domestic automobile manufacturers?
Comparing the auto industry of today to Sweden’s shipbuilding industry of the 1960s through 1970s is simply baseless. As shown hereinbelow, there is no comparison whatsoever. The industries are completely different. The markets are completely different. The economic circumstances are completely different.
It is not too late to save SAAB. SAAB is merely in bankruptcy. Now is the most opportune time in history for the Swedish government to aid SAAB, as outlined hereinbelow. Set forth herein, I describe precisely how the government should process SAAB through its bankruptcy and how SAAB should be restructured so as to ensure profitability. Restored to profitability, SAAB will replay its government loans and enjoy commercial success far greater than anything before in its 60 year history, guaranteed.

FOR THE FIRST TIME IN HISTORY, ONE PRIME MINISTER MAY PRESIDE OVER HIS NATION’S LOSS OF ITS ENTIRE AUTOMOBILE MANUFACTURING INDUSTRY

The Polls Supporting the Government’s Decision are Out of Date and Incomplete

Hans Petterson, a spokesman for Minister Loof, stated Sweden’s democracy had spoken and the people of Sweden did not want to save SAAB. However, the Government’s reliance on the outdated yet often cited polls, most notably from 2009 when the world was gripped with fear during the most severe economic downturn in decades, is gravely misplaced.

According to the 2009 polls, just 30 percent of those surveyed supported a government bailout of SAAB while only 20 percent of Swedes over 65 years old indicated the government should bail out Saab, which was then owned by U.S. car maker General Motors. (What’s interesting to note is the older the person polled, the more the resistance to helping SAAB. Yet the younger people represent both Sweden’s future and the greater pool of prospective automobile purchasers.)

Here in the U.S., the results of similar 2009 polls concerning the bailout of GM resulted in even lower numbers in support of a bailout. The 2009 poll, conducted by Hart Research Associates, showed just 26% of Americans surveyed supported the bailout while 67% opposed.

However, that was then and this is now. Economic times have improved greatly while the world’s auto industry in particular has enjoyed substantial growth and profits.

In 2009, GM needed $49.5 billion in government loans to survive a trip through bankruptcy court. Since emerging from bankruptcy, GM has been more profitable than ever. GM made a net profit of just over $7.1 billion in the first nine months of this year. Thanks to the government bailout, GM will reclaim the title as the world’s largest manufacturer of automobiles. Showing how significant the industry’s turnaround has been, GM has amassed more than $34 billion dollars in cash in its reserves.

Thus, when the same poll was conducted in 2011, 70% of those Americans surveyed now viewed the bailout and its results favorably and support the bailout.

Thankfully for the U.S. economy and hundreds of thousands of jobs, the U.S. government did what it thought was right for the Nation in the long run irrespective of the polls. As noted above, leaders are entrusted to lead. They are expected to rely on experts and be fully briefed on such matters. Public opinion polls are nothing more than that: Opinions from the average person on the street who does not have the requisite expertise nor the full briefing needed to make these complex decisions. They are merely expressing their lay person’s opinion. They vest their confidence in their elected leaders to make the right and informed decisions.
President Obama understood that building the manufacturing base in the United States was one of the keys to job creation. Experts believe that each new manufacturing job generates two to five other jobs in the U.S. economy—with the multiplier for auto industry jobs is closer to nine times based on a recent study by Ceres. The numbers are similar in Germany, where the automobile industry is one of the largest employers in the country with a direct work force of 750,000 and five million indirect employees. Fully one-in-seven employees in Germany is in the automobile industry.
Ron Bloom, who served as the Obama administration’s senior counselor for manufacturing, laments, “If you let manufacturing go, over time that will have a negative gravitational pull on innovation.”
If SAAB is allowed to die, the Swedish people will never have the opportunity to revise their views in favor of a bailout, as did Americans. It will be too late, both for SAAB and Sweden’s long-term manufacturing base.

THE CONCLUSIONS DRAWN FROM THE POLLS WERE FLAWED & INCOMPLETE

There is a fundamental error to the conclusions drawn from the polls as the question was not adequately presented to those surveyed, rendering the then hypothetical question incomplete. When people speak of those polls, what’s not mentioned is that Swede’s believed without a bailout SAAB would actually survive.

Add a Comment

Error message

Name

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comment

About Deal Journal India

Deal Journal India is a one-stop destination following deals, deal-makers, private equity and venture-capital activity in India. The real-time blog is updated throughout the day with breaking news, exclusive analysis, commentary and profiles. Edited by The Wall Street Journal’s Vibhuti Agarwal, Deal Journal India features contributions from the South Asia bureaus of The Wall Street Journal and Dow Jones Newswires in Mumbai and Delhi as well as bureaus around the world. Reach our Editors at dealsindia@wsj.com or follow Deal Journal India on Facebookand Twitter.

Loading, please wait...

Fins.com has moved

Welcome to eFinancialCareers, the number one career site for financial services.

FINS has become a part of DHI in order to improve your job search experience. eFinancialCareers will provide you with the best possible service, the best job opportunities and editorial content and the best talent. With our long track record of helping finance professionals develop their career, from graduating to landing top positions in the industry, we will continue to deliver.